U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                -----------------

                                   FORM 10-QSB

/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2006



/ /      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                        Commission file number: 001-32134
                                                ---------

                           CIRCLE GROUP HOLDINGS, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                        ILLINOIS                     36-4197173
               -------------------------------    ------------------
                (State or Other Jurisdiction of    (I.R.S. Employer
               Incorporation or Organization)     Identification No.)

                  1011 CAMPUS DRIVE, MUNDELEIN, ILLINOIS 60060
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 (847) 549-6002
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /

The registrant has a single class of common stock, par value $.00005 per share,
of which there were 60,743,533 shares issued and outstanding as of May 12, 2006.

Transitional Small Business Disclosure Format (Alternative 2): Yes / / No /X/

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See Consolidated Financial Statements beginning on page F-1.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The purpose of this section is to discuss and analyze our condensed consolidated
financial condition, liquidity and capital resources, and results of operations.
This analysis should be read in conjunction with the condensed consolidated
financial statements and notes thereto at pages F-1 through F-12 and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in our Annual Report on Form 10-KSB for the year ended
December 31, 2005 (the "2005 10-KSB").

This section contains certain forward-looking statements that involve risks and
uncertainties, including statements regarding our plans, objectives, goals,
strategies and financial performance. Our actual results could differ materially
from the results anticipated in these forward-looking statements as a result of
factors set forth under "Cautionary Statement for Forward-Looking Information
and Factors Affecting Future Results" below and elsewhere in this report.

OVERVIEW

In 2005 we refined our direction from a pioneer of emerging technology companies
where we provided small business infrastructure, funding and substantial
intellectual capital to bring important and timely life-changing technologies to
the marketplace through all phases of the commercialization process, to a
company that will focus its resources primarily on the manufacture, marketing
and sale of Z-Trim, our zero calorie fat substitute and other Z-Trim related
products. The company will continue exploring all available options for its
other non-Z-Trim technologies and related assets.

Circle Group Holdings, Inc. was formed by Gregory J. Halpern, our Chairman and
Chief Executive Officer, as an Illinois corporation, in May 1994 under the
original name, Circle Group Entertainment Ltd. In 1997, we changed our name to
Circle Group Internet, Inc., and in 2002, we changed our name to Circle Group
Holdings, Inc. We had no business operations except for research and development
activities between May 1994 and January 1997. Since then, we have participated
in several public and private offerings and have expanded our business. In 2002,
we reorganized our business units into three reportable segments: food product
development, security product development, and e-tailor and acquired FiberGel
Technologies, Inc. ("FiberGel"), which owns an exclusive license to Z-Trim, an
all-natural, agricultural-based fat replacement.

We  have  four  operating  subsidiaries:   Fiber-Gel  Technologies,   Inc.,
thebraveway.com,  Inc.,  operating  as The Brave Way Training  Systems,  On-Line
Bedding Corp.,  and Z-Amaize  Technologies,  Inc., and have exclusive  worldwide
licenses to the Nutrition  Analysis Tool website,  Mini-Raman Lidar System,  and
ThraxVac technology.

RECENT MATERIAL DEVELOPMENTS

On March 24 through 30, 2006, we entered into private placement subscription
agreements pursuant to which we sold unregistered shares of our common stock,
par value $0.00005 per share ("Common Stock"), and warrants exercisable for
Common Stock. We sold approximately 205 units in the private placement, with
each unit consisting of 40,323 shares of Common Stock. In the aggregate we sold
8,279,594 shares of Common Stock, and Warrants to purchase an additional 161,292
shares of Common Stock. Gross proceeds from the sales totaled $5,133,298. We
also entered into a registration rights agreement in connection with the private
placement pursuant to which we agreed to file with the Securities and Exchange
Commission a registration statement covering the resale of the Common Stock and
Common Stock underlying the Warrants.

                                       2
<PAGE>
On March 27, 2006, Edward L. Halpern, age 76, announced his retirement from our
Board of Directors.

On March 22, 2006, our Board of Directors promoted Steve Cohen, formerly Vice
President of Corporate Development, to President, an office previously held by
Greg Halpern. Greg Halpern continues to hold the office of Chief Executive
Officer.

On November 23, 2005, we entered into an Agreement with George Foreman
Enterprises, Inc. to form a new limited liability company for the purpose of
promoting the Company's zero calorie fat replacement food ingredient, Z-Trim(R).
We have not yet reached a definitive agreement with George Foreman Enterprises,
Inc. ("GFME") for our proposed joint venture to market Z Trim. On May 4, 2006,
GFME filed a Current Report on Form 8-K with the Securities and Exchange
Commission publicly disclosing certain correspondence between the companies'
attorneys concerning the status of those negotiations. Finding that behavior,
among other circumstances, unacceptable, on May 9, 2006, we filed a lawsuit
against GFME in the Circuit Court for Lake County, Illinois alleging breach of
the parties' nondisclosure agreement and misappropriation of trade secrets. In
that lawsuit we are seeking injunctive relief and damages. That lawsuit has been
removed to Federal District Court for the Northern District of Illinois and a
hearing on our request for injunctive relief is pending.

On May 2, 2006, we announced that we are aware that trading in our common stock
appears to be subject to widespread market manipulation. At that time, we asked
shareholders to demand their physical stock certificates from their brokers as
one tactic in a strategy to combat these problems. We are in the process of
developing a comprehensive plan to combat any and all market abuses confronting
our stock and to restore value to our shareholders to the extent possible. A
website will be made available to update shareholders with further information.

In February 2006, we announced that our Board of Directors approved a change of
the company name from Circle Group Holdings, Inc. to Z-Trim Holdings. This
change is subject to shareholder approval in 2006. Immediately following
shareholder approval the trading symbol will be changed from CXN to ZTM, the
cusip number will be changed and new certificates will be issued to replace all
existing shares. In keeping with our efforts to grow the Z-Trim business, we
will focus our resources on Z-Trim and Z-Trim related products, while exploring
all available options for its other non-Z-Trim technologies and related assets.

In 2006, our Board of Directors approved a wind-down of two inactive
subsidiaries, CGI Capital, Inc. and Veridisc Corporation, both of which had no
assets or liabilities as of December 31, 2005.

On December 19, 2005 FiberGel Technologies, a subsidiary of Circle Group
Holdings announced that it received a purchase order for 2500 pounds of Z-Trim
for immediate delivery. The order had come after several months of successful
testing by a South American meat company. The order was made through FiberGel's
international partner, DKSH.

                                       3
<PAGE>
Market demand for Z-Trim is escalating, driven by the convergent triangle of
consumer demand, market response, and government interest in healthier food
favorites.

The food industry's need for a solution such as Z-Trim is evident by the number
of Z-Trim pilot tests recently undertaken by the food manufacturing and food
service sectors.

We have recently delivered Z-Trim orders and sample requests to several large
food companies to use in pilot tests in a variety of their products. We have
also provided Z-Trim Plus for testing by various players within the food service
industry and healthcare food service operations, including one of the largest
privatized school foodservice contractors in the U.S. Z-Trim Plus is being
tested in school districts in both inner city and suburban areas of the Midwest
and the east coast.

One of the world's largest producers of fresh fruits and vegetables is testing
Z-Trim in dressings for salads and inclusion in some of its value-added
products, such as dressings in packaged salads.

Initial orders for Z-Trim have been received and shipped to a major Asian
manufacturer and distributor of seasonings and food ingredients.

Interest in Z-Trim products continues to grow internationally with initial
orders and shipments of corn and oat Z-Trim made to a cookie company and a
processed meat manufacturer in South America and to a cookie company in
Australia. We have also provided samples of Z-Trim to many companies in Europe,
South America, Asia, Australia, and North America with the companies currently
in various stages of product testing.

SUMMARY OF FINANCIAL RESULTS

Total assets increased to $11,173,099 at March 31, 2006 from $8,251,545 on March
31, 2005. This was primary the result of the proceeds received from equity
transactions offsetting against the net operating loss.

Total equity increased to $10,117,331 on March 31, 2006 compared to $7,244,643
for the year ended March 31, 2005.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2006 AS COMPARED TO THE SAME PERIODS ENDING MARCH
31, 2005

Revenues

Revenues decreased by $4,156 or 3% to $115,443 for the three months ended March
31, 2006 from $119,599 for the three months ended March 31, 2005. The decrease
in revenues was primarily due to the decrease in demand of our e-tailer products
as a result of budget cuts in the airline and train industries, offset by an
increase in Z-Trim and Braveway sales. The following table provides a breakdown
of the revenues for our divisions for the periods indicated:

                                        Three months ended March 31,
                                             2006           2005
                                           --------       --------
           Products                        $111,720       $117,575
           Services                           3,527          2,024
             Other                              196              -
                                           --------       --------
        Total Revenues                     $115,443       $119,599
                                           ========       ========


                                       4
<PAGE>
Operating expenses

Operating expenses consist of payroll and related costs, stock option expense,
insurance, occupancy expenses, professional fees, and general operating
expenses. Total operating expenses increased by $1,121,029 or 72% to $2,671,097
for the three months ended March 31, 2006. The increase in operating expenses
was primarily due to the change in the accounting treatment for stock option
expense.

The stock option expense for the three months ending March 31, 2006 and 2005 was
$1,093,500 and $0 respectively.

Other income (expense)

Total other income for the three months ended March 31, 2006 was $5,697,
compared to $13,228 for the comparable period in fiscal 2005. The decrease in
other income was primarily due to the decrease in rental income.

Net loss

The Company reported a net loss for the first quarter of 2006 of $2,705,699 or
$0.05 per share, a 42% increase from the net loss of $1,557,069 or $0.03 per
share for the first quarter of 2005. This was due to the company adopting FASB
statement No. 123, (Accounting for Stock Issued to Employees) effective January
1, 2006, the introduction and promotion of Z-Trim products, the increase in
investor and public relation expenses.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2006, we had cash and cash equivalents of $4,001,797, an increase
of $3,496,301 from March 31, 2005 primarily due to cash proceeds from the
private placement of stock. Our total capital lease obligations were $35,673 at
March 31, 2006.

Net cash used by operating activities decreased by $883,760 or 49% to $930,135
for the three months ended March 31, 2006 as compared to $1,813,895 for the
three months ended March 31, 2005. The decrease resulted primarily from our net
loss adjusted for non-cash items including depreciation and amortization, stock
option expense of $1,093,500, and non-cash services, and for the decrease from
the change in liabilities over assets of approximately $250,700.

Net cash used by investing activities was $1,960 for the three months ended
March 31, 2006, as compared to net cash used by investing activities of $133,605
for the three months ended March 31, 2005. The decrease was due to lesser
additions of property and equipment for our manufacturing plant in the current
year.

                                       5
<PAGE>
Net cash provided by financing activities was $4,908,893 for the three months
ended March 31, 2006, as compared to $2,359,248 for the three months ended March
31, 2005. Net cash provided by financing activities for the three months ended
March 31, 2006 was primarily from the proceeds received from sale of our stock
and the exercising of options and warrants of $4,918,288. Net cash provided by
financing activities for the three months ended March 31, 2005 was primarily
from sale of our stock and from the exercising of options and warrants of
$2,364,750.

To successfully grow the individual segments of the business, the Company must
maintain its cash position, and increase the revenue base of each segment, as
well as continue to succeed in its ability to raise additional capital through a
combination of public or private equity offerings, or strategic alliances. The
Company also depends on certain important employees, and the loss of any of
those employees may harm the Company's business.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements as defined in Item 303(c) of
Regulation S-B.

CAUTIONARY STATEMENT FOR FORWARD LOOKING INFORMATION

Certain information set forth in this report contains "forward-looking
statements" within the meaning of federal securities laws. Forward looking
statements include statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital expenditures,
and financing needs and other information that is not historical information.
When used in this report, the words "estimates," "expects," "anticipates,"
"forecasts," "plans," "intends," "believes" and variations of such words or
similar expressions are intended to identify forward-looking statements.
Additional forward-looking statements may be made by us from time to time. All
such subsequent forward-looking statements, whether written or oral and whether
made by us or on our behalf, are also expressly qualified by these cautionary
statements.

Our forward-looking statements are based upon our current expectations and
various assumptions. Our expectations, beliefs and projections are expressed in
good faith and are believed by us to have a reasonable basis, including without
limitation, our examination of historical operating trends, data contained in
our records and other data available from third parties, but there can be no
assurance that our expectations, beliefs and projections will result or be
achieved or accomplished. Our forward-looking statements apply only as of the
date made. We undertake no obligation to publicly update or revise
forward-looking statements which may be made to reflect events or circumstances
after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause actual results to
differ materially from those set forth in, contemplated by or underlying the
forward-looking statements contained in this report. Those risks and
uncertainties include, but are not limited to, our history of operating losses,
risks associated with our incomplete joint venture with George Foreman, lack

                                       6
<PAGE>
thus far of significant market acceptance of our products, the fact that we may
dilute existing shareholders through additional stock issuances, management's
significant ownership of our common stock, our reliance on our intellectual
property, and the potential negative effects of manipulation in the trading of
our common stock. Those risks and certain other uncertainties are discussed in
more detail in the 2005 10-KSB. There may also be other factors, including those
discussed elsewhere in this report, that may cause our actual results to differ
from the forward-looking statements. Any forward-looking statements made by us
or on our behalf should be considered in light of these factors.

ITEM 3. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures (as defined pursuant to
Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934), based on
their evaluation of such controls and procedures as of the end of the period
covered by this report, are effective to ensure that information required to be
disclosed by the Company in the reports it files under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to the
Company's management, including its Chief Executive officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company's internal controls over financial
reporting identified in connection with management's evaluation that occurred
during the Company's last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                           PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

As disclosed in Note 11 to the financial statements, the Company filed a lawsuit
against a group of shareholders on May 11, 2005 in the U.S. District Court for
the Northern District of Illinois to collect the unpaid principal balance,
default interest and attorney fees for a Full Recourse Promissory Note
receivable for stock issued. The Company is in the discovery process and a trial
date has not been set. The defendants in that case have sold all of the shares
they purchased but did not pay for.

In response, on December 27, 2005 those shareholders and a related hedge fund
they own, Pac Bay Financial, filed a lawsuit back against the Company and its
directors and officers. That lawsuit, which is being heard by the same Judge as
in the Company's Note Default case listed above, alleges that oral
misrepresentations were made to induce purchases of stock over an approximate
one and one-half year period. Plaintiffs seek $2 million in compensatory damages
and $5 million in punitive damages. The basis for these damages claims is yet
unknown. The Company believes that they have meritorious defenses against this
action, and will continue to vigorously defend it. The claim against the
officers and directors is covered by D&O insurance to the extent that three of
the individual officers and directors are covered. The insurance coverage pays
for defense costs only and provides no indemnity coverage.

                                       7
<PAGE>
In March 2005 the Company's general contractor that built the manufacturing
plant and installed the equipment filed a mechanics lien for unpaid billings.
The claim of $250,000 represents the construction cost overruns in the build-out
of the facility. The discovery process has commenced and no trial date has been
set. A liability of $142,000 has been included in accounts payable. Management
believed that the amount of ultimate liability with respect to such action will
not exceed such amount.

A complaint was filed in the United States District Court for the Northern
District of Illinois by a former investor relations consultant against the
Company. The plaintiff alleges that the Company breached an investment banking
contract by failing to issue free trading and fully registered stock
certificates pursuant to plaintiff's exercise of various stock warrants. The
Company has filed a motion to dismiss on the ground that free trading and fully
registered stock certificates were issued to the plaintiff in accordance with
the express terms of the warrants. The parties have agreed to go to mediation,
which was scheduled on April 3, 2006. The company feels that the complaint is
without merit and the parties are still negotiating a settlement acceptable to
both parties.

A complaint alleging a similar claim against the Company was transferred in the
United States District Court for the Northern District of Illinois in 2005. The
parties have also agreed to go to mediation, which was scheduled on April 3,
2006. The company feels that the complaint is without merit and the parties are
still negotiating a settlement acceptable to both parties.

As disclosed in "Recent Material Developments" above, On November 23, 2005, we
entered into an Agreement with George Foreman Enterprises, Inc. to form a new
limited liability company for the purpose of promoting the Company's zero
calorie fat replacement food ingredient, Z-Trim(R). We have not yet reached a
definitive agreement with George Foreman Enterprises, Inc. ("GFME") for our
proposed joint venture to market Z Trim. On May 4, 2006, GFME filed a Current
Report on Form 8-K with the Securities and Exchange Commission publicly
disclosing certain correspondence between the companies' attorneys concerning
the status of those negotiations. Finding that behavior, among other
circumstances, unacceptable, on May 9, 2006, we filed a lawsuit against GFME in
the Circuit Court for Lake County, Illinois alleging breach of the parties'
nondisclosure agreement and misappropriation of trade secrets. In that lawsuit
we are seeking injunctive relief and damages. That lawsuit has been removed to
Federal District Court for the Northern District of Illinois and a hearing on
our request for injunctive relief is pending.

The Company is also a party to various legal proceedings and claims, either
asserted or unasserted, which arise in the ordinary course of business. While
the outcome of these matters cannot be predicted with certainty, management does
not believe that the outcome of any of these claims or any of the above
mentioned legal matters will have a material adverse effect on the Company's
consolidated financial position, results of operations, or cash flows.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

On March 24 through 30, 2006, the Company entered into private placement
subscription agreements pursuant to which it sold unregistered shares of our
common stock, par value $0.00005 per share ("Common Stock"), and warrants
exercisable for Common Stock. The Company sold approximately 205 units in the
private placement, with each unit consisting of 40,323 shares of Common Stock.
In addition, investors who invested at least $500,000 in the private placement
received a five-year warrant with an exercise price of $1.00 per share to
purchase a number of shares of Common Stock equal to 10% of the number of shares
of Common Stock purchased (the "Warrants"). In the aggregate the Company sold
8,254,368 shares of Common Stock, and Warrants to purchase an additional 161,292
shares of Common Stock. Proceeds from the sale, net of commissions of $511,208,
totaled $4,600,870, of which $4,280,654 were received as of March 31, 2006. The
Company also entered into a registration rights agreement in connection with the
private placement pursuant to which it has agreed to file with the Securities
and Exchange Commission a registration statement covering the resale of the
Common Stock and Common Stock underlying the Warrants.

                                       8
<PAGE>
National Securities Corporation ("National Securities") served as the lead
placement agent in connection with the private placement. National Securities
will receive cash fees in the aggregate of $511,208 and warrants to purchase
824,537 shares of Common Stock on terms which are identical to the Warrants
included in the units except that the exercise price is $0.68 per share and they
contain an assignment provision. In addition, the placement agent's warrant has
registration rights that are the same as those afforded to investors in the
private placement. The Company determined that all of the securities sold and
issued in the private placement were exempt from registration under the
Securities Act of 1933, as amended (the "Act") pursuant Section 4(2) of the Act
and Rule 506 of Regulation D Promulgated under the Act. The Company based this
determination on the non-public manner in which it offered the securities and on
the representations of the persons purchasing such securities, which included,
in pertinent part, that such persons were "accredited investors" within the
meaning of Rule 501 of Regulation D promulgated under the Act, and that such
persons were acquiring such securities for investment purposes for their own
respective accounts and not as nominees or agents, and not with a view to resale
or distribution, and that each such persons understood such securities may not
be sold to otherwise deposed of without registration under the Act or an
applicable exemption therefrom.

In January 2006, the Company conducted a self-underwritten offering of the
Company's common stock up to $1.24 million. The stock was sold for $31,000 per
unit. Each unit consists of 50,000 shares of common stock and 50,000 warrants.
The warrants are exercisable at $1.00 per share and expire in three (3) years
after purchase of the above-described unit. As of March 31, 2006, the Company
sold and issued 1,000,000 shares and received proceeds of $564,896 as of March
31, 2006 under the offering. Additional proceeds of $55,104 were received in
April 2006.

ITEM 6. EXHIBITS

Exhibit No.                           Description
-----------    -----------------------------------------------------------------

3.1(i)         Articles of Incorporation of Circle Group Holdings,
               Inc.[Incorporated by reference to Exhibit 2.1 to Circle Group's
               Registration Statement on Form 10-SB]

3.1(ii)        Bylaws of Circle Group Holdings, Inc. [Incorporated by reference
               to Exhibit 2.2 to Circle Group's Registration Statement on Form
               10-SB]

4.1            Form of Subscription Agreement (filed as Exhibit
               4.1 to the Company's Form 8-K filed on March 30, 2006 and
               incorporated herein by reference).

4.2            Form of Warrant to Purchase Common Stock (filed as Exhibit 4.2 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

4.3            Form of Registration Rights Agreement (filed as Exhibit 4.3 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

10.1           Gregory J. Halpern Employment Agreement [Incorporated by
               reference to Exhibit 6.1 to Circle Group's Registration Statement
               on Form 10-SB]

10.2           Michael Theriault Employment Agreement [Incorporated by reference
               to Exhibit 6.3 to Circle Group's Registration Statement on Form
               10-SB]


                                       9
<PAGE>
10.3           Dana L. Dabney Employment Agreement [Incorporated by reference to
               Exhibit 6.4 to Circle Group's Registration Statement on Form
               10-SB]

10.4 (a)       Circle Group Holdings,Inc. 1999 Stock Option Plan [Incorporated
               by reference to Exhibit 6.6 to Circle Group's Registration
               Statement on Form 10-SB]

10.4 (b)       Circle Group Holdings, Inc. 2004 Equity Incentive Plan
               [Incorporated by reference to Circle Group's Proxy Statement for
               its Annual Meeting conducted on June 16, 2004 and approved by its
               Shareholders on that date]

10.5           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated May 20, 1999 [Incorporated by
               reference to Exhibit 6.7 to Circle Group's Registration Statement
               on Form 10-SB]

10.6           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated June 18, 1999 [Incorporated by
               reference to Exhibit 6.8 to Circle Group's Registration Statement
               on Form 10-SB]

10.7           Promissory Note, Dated November 30, 2002, delivered by Circle
               Group Holdings, Inc. in favor of Edward L. Halpern [Incorporated
               by reference to Exhibit 6.11 to Circle Group's Annual Report on
               Form 10-KSB for the year ended December 31, 2002]

10.8           Asset Purchase Agreement, dated August 27, 2002, by and between
               Circle Group Holdings, Inc. and UTEK Corporation [Incorporated by
               reference to Circle Group's Current Report on Form 8-K filed on
               September 11, 2002]

10.9           Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and Brookhaven Science Associates dated
               March 26 2003 [Incorporated by reference to Exhibit 10.14 to
               Circle Group's Form 10-QSB for the quarter ending September 30,
               2003]

10.10          Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and University of Illinois dated July 9,
               2003 [Incorporated by reference to Exhibit 10.15 to Circle
               Group's Form 10-QSB for the quarter ending September 30, 2003]

10.11          Assignment of License Agreement between Circle Group Holdings,
               Inc. and Brookhaven Science Associates dated July 22, 2003
               [Incorporated by reference to Exhibit 10.16 to Circle Group's
               Form 10-QSB for the quarter ending September 30, 2003]

31.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

* Filed herewith

                                       10
<PAGE>
                  Index to Financial Statements
                  -----------------------------

Consolidated Balance Sheet at
March 31, 2006 (unaudited).............................................F-3

Consolidated Statement of
  Operations as of March 31, 2006 (unaudited)..........................F-4

Consolidated Statements of
  Cash Flows as of March 31, 2006 (unaudited)..........................F-5

Notes to Interim Unaudited
  Consolidated Financial Statements....................................F-6


                                      F-1

<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
MARCH 31, 2006 AND 2005
--------------------------------------------------------------------------------------------------
                                     ASSETS

Current Assets                                                       2006              2005
                                                               ----------------- -----------------
<S>                                                            <C>               <C>
  Cash and cash equivalents                                    $      4,001,797  $        505,496
  Accounts receivable                                                    73,506            30,439
  Prepaid expenses and other assets                                      96,704            63,906
  Inventory                                                             106,410           144,029
                                                               ----------------- -----------------
Total current assets                                                  4,278,417           743,870
                                                               ----------------- -----------------

Property and equipment, net                                           6,363,245         6,941,905
                                                               ----------------- -----------------

Other Assets
  Deposits                                                               11,103            11,103
  Intangible assets, net                                                520,334           554,667
                                                               ----------------- -----------------
Total other assets                                                      531,437           565,770
                                                               ----------------- -----------------

TOTAL ASSETS                                                   $     11,173,099  $      8,251,545
                                                               ================= =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts payable                                             $        804,137  $        858,057
  Accrued expenses                                                      215,958            55,429
  Note payable - related party                                                -            25,000
  Capital lease obligations                                              27,459            31,854
                                                               ----------------- -----------------
Total current liabilities                                             1,047,554           970,340
                                                               ----------------- -----------------

Long-Term Liabilities
  Capital lease obligations                                               8,214            36,562
                                                               ----------------- -----------------

TOTAL LIABILITIES                                                     1,055,768         1,006,902
                                                               ----------------- -----------------

Minority deficit                                                              -          (100,520)

Stockholders' Equity
  Common stock, $.00005 par value; 200,000,000 shares
   authorized; 59,829,144 shares issued and outstanding                   2,988             2,237
  Common stock to be issued                                                  22                23
  Additional paid-in capital                                         46,943,528        38,588,347
  Notes and other receivable for issuance of stocks                    (240,104)       (1,115,000)
  Unamortized expenses                                                 (818,721)       (1,534,276)
  Accumulated deficit                                               (35,759,113)      (28,584,899)
  Treasury stock, at cost                                               (11,269)          (11,269)
                                                               ----------------- -----------------
TOTAL STOCKHOLDERS' EQUITY                                           10,117,331         7,244,643
                                                               ----------------- -----------------

TOTAL LIABILITIES AND STOCKHOLDERS'  EQUITY                    $     11,173,099  $      8,251,545
                                                               ================= =================
</TABLE>
        See notes to interim unaudited consolidated financial statements

                                       F-3
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>

For three months ended March 31,                                 2006                   2005
----------------------------------------------------------------------------------------------------
<S>                                                            <C>                 <C>
REVENUES
  Products                                                     $     111,720       $        117,575
  Services                                                             3,723                  2,024
----------------------------------------------------------------------------------------------------
Total revenues                                                       115,443                119,599
----------------------------------------------------------------------------------------------------

COST OF REVENUES
  Products                                                           155,742                144,372
  Services                                                                 -                 17,110
----------------------------------------------------------------------------------------------------
Total cost of revenues                                               155,742                161,482
----------------------------------------------------------------------------------------------------

OPERATING EXPENSES
  Selling, general and administrative                              1,569,014              1,541,485
  Stock option expense                                             1,093,500                      -
  Amortization of purchased intangible assets                          8,583                  8,583
----------------------------------------------------------------------------------------------------
Total operating expenses                                           2,671,097              1,550,068
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
OPERATING LOSS                                                    (2,711,396)            (1,591,951)
----------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE)
  Other income                                                        11,065                 13,000
  Interest income                                                          -                  3,709
  Interest expense                                                    (5,368)                (3,481)
----------------------------------------------------------------------------------------------------
Total other income                                                     5,697                 13,228
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
NET LOSS BEFORE MINORITY INTEREST                              $  (2,705,699)          $ (1,578,723)
----------------------------------------------------------------------------------------------------

Minority interest in losses of subsidiaries                    $           -                 21,654

----------------------------------------------------------------------------------------------------
NET LOSS                                                       $  (2,705,699)          $ (1,557,069)
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
Net Loss per Share - Basic and Diluted                         $       (0.05)               $ (0.03)
----------------------------------------------------------------------------------------------------

Weighted Average Number of Shares                                 54,473,170             44,618,109
</TABLE>
        See notes to interim unaudited consolidated financial statements

                                      F-4
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>

For three months ended March 31,                                                 2006                 2005
-----------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                  <C>
Cash Flow From Operating Activities:
  Net loss                                                                     $ (2,705,699)        $ (1,557,069)
  Adjustments to reconcile net loss to net cash used in operations:
   Minority deficit                                                                       -              (21,654)
   Depreciation and amortization                                                    159,424              164,325
   Amortization of noncash expenses                                                 618,176              315,313
   Stock option expense                                                           1,093,500
   Stocks and warrants issued for services                                          155,164              201,629
   (Increase) decrease in:
     Accounts receivable, net                                                       (13,060)              56,026
     Prepaid expenses and other assets                                              (11,034)              36,642
     Inventory                                                                       (7,623)             (28,287)
   Increase (Decrease) in:
     Accounts payable and other liabilities                                        (218,983)            (980,820)
-----------------------------------------------------------------------------------------------------------------
           Cash flows used in operating activities                                 (930,135)          (1,813,895)
-----------------------------------------------------------------------------------------------------------------

Cash Flow From Investing Activities:
  Purchase of property and equipment                                                 (1,960)            (133,605)
-----------------------------------------------------------------------------------------------------------------
           Cash flows used in investing activities                                   (1,960)            (133,605)
-----------------------------------------------------------------------------------------------------------------

Cash Flow From Financing Activities:
  Net proceeds from sales of stock                                                4,845,488                    -
  Exercise of warrants and options                                                   72,800               14,750
  Proceeds from notes receivable for stock                                                -            2,350,000
  Repayments on capital lease obligations                                            (9,395)              (5,502)
-----------------------------------------------------------------------------------------------------------------
           Cash flows provided by financing activities                            4,908,893            2,359,248
-----------------------------------------------------------------------------------------------------------------
           Net increase in cash and cash equivalents                              3,976,798              411,748

Cash and cash equivalents, at beginning of period                                    24,999               93,748
-----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, at end of period                                    $  4,001,797      $       505,496
-----------------------------------------------------------------------------------------------------------------

Supplemental Disclosures of Cash Flow Information:
      Interest paid                                                            $      5,368      $         2,841
Supplemental Schedules of Noncash Investing and Financing Activities:
  Issuance of common stock and warrants for unamortized services               $  1,334,743      $             -
  Issuance of common stock for liabilities incurred equipment purchase         $          -      $       186,582
  Stock subscription receivable incurred from issuing of stocks                $     55,104      $             -


</TABLE>
        See notes to interim unaudited consolidated financial statements

                                      F-5
<PAGE>

CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
------------------

In 2005, Circle Group Holdings, Inc. (the "Company") refined its direction from
a pioneer of emerging technology companies where it provided small business
infrastructure, funding and substantial intellectual capital to bring important
and timely life-changing technologies to the marketplace through all phases of
the commercialization process, to a company that will focus its resources
primarily on the manufacture, marketing and sale of Z-Trim, its zero calorie fat
substitute and other Z-Trim related products. The company will continue
exploring all available options for its other Z-Trim technologies and related
assets.

The Company has participated in several public and private offerings and has
expanded its business. In 2002, the Company acquired FiberGel Technologies, Inc.
("FiberGel"), which owns an exclusive license to Z-Trim, an all-natural,
agriculture-based fat replacement. The Company reorganized its business units
into three reportable segments: food product development, security product
development and e-tailer.

The Company operates through its FiberGel, Mini-Raman Lidar Technology, Thrax
Vac Technology, The Brave Way Training Systems, Inc., On-Line Bedding Corp., and
Z-Amaize Technologies, Inc. divisions.

A summary of significant accounting policies follows.

Presentation of Interim Information
-----------------------------------

The financial information at March 31, 2006 and for the three months ended March
31, 2006 and 2005 is unaudited, but includes all adjustments (consisting only of
normal recurring adjustments) that the Company considers necessary for a fair
presentation of the financial information set forth herein, in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP") for
interim financial information, and with the instructions to Form 10-QSB and Item
310 (b) of Regulation S-B. Accordingly, such information does not include all of
the information and footnotes required by U.S. GAAP for annual financial
statements. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual Report on Form
10-KSB for the year ended December 31, 2005.

The results for the three months ended March 31, 2006 may not be indicative of
results for the year ending December 31, 2006 or any future periods.

Principle of Consolidation and Presentation
-------------------------------------------

The accompanying consolidated financial statements include the accounts of
Circle Group Holdings Inc. and its subsidiaries after elimination of all
intercompany accounts and transactions. Certain prior period balances have been
reclassified to conform to the current period presentation.

Use of estimates
----------------

The preparation of the accompanying consolidated financial statements in
conformity with accounting principles generally accepted in the United States
(U.S. GAAP) requires management to make certain estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

                                      F-6

<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Income (Loss) Per Common Share
------------------------------

Basic net income (loss) per share includes no dilution and is computed by
dividing net income (loss) available to common stockholders by the weighted
average number of common stock outstanding for the period. Diluted earnings per
share is computed by dividing net income by the weighted average number of
shares outstanding and, when, diluted, potential shares from options and
warrants to purchase common stock using the treasury stock method. Diluted net
loss per common share does not differ from basic net loss per common share since
potential shares of common stock are anti-dilutive for all periods presented.

Stock Based Compensation
------------------------

Prior to January 1, 2006, the Company's stock option plans were accounted for
under the recognition and measurement provisions of APB Opinion No. 25 (Opinion
25), "Accounting for Stock Issued to Employees," and related Interpretations, as
permitted by FASB Statement No. 123, "Accounting for Stock-Based Compensation"
(as amended by SFAS No. 148, "Accounting for Stock-Based Compensation Transition
and Disclosure") (collectively SFAS 123). No stock-based employee compensation
cost was recognized in the Company's consolidated statements of operations
through December 31, 2005, as all options granted under the plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant. Effective January 1, 2006, the Company adopted the fair value
recognition provisions of FASB Statement No. 123(R), "Share-Based Payment" (SFAS
123R), using the modified-prospective-transition method. Under that transition
method, compensation cost recognized in 2006 includes: (a) compensation cost for
all share-based payments granted prior to, but not yet vested as of January 1,
2006 based on the grant date fair value calculated in accordance with the
original provisions of SFAS 123, and (b) compensation cost for all share-based
payments granted subsequent to December 31, 2005, based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R).

As a result of adopting SFAS 123(R) on January 1, 2006, the Company recognized
pre-tax compensation expense related to stock options of $1,093,500. The
following table illustrates the effect on net loss and net loss per share if the
Company had applied the fair value recognition provisions of SFAS 123 to options
granted under the Company's stock option plan for the three months ended March
31, 2005. For purposes of this pro forma disclosure, the value of the options is
estimated using the Black-Scholes option-pricing model and is being amortized to
expense over the options' vesting periods.


Three Months ended March 31,                            2005
------------------------------------------------    -------------
Net loss, as reported                               $ (1,557,069)

Deduct: Total stock-based employee compensation
 expense determined under the fair value of awards
 net of tax related effects                              495,709
                                                    -------------
Pro forma net loss                                  $ (2,052,778)
                                                    =============
Reported net loss per share-basic and diluted            $ (0.03)
                                                    =============

Pro forma net loss per share-basic and diluted           $ (0.05)
                                                    =============


                                      F-7

<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
--------------------------------------------------------------------------------

New Accounting Pronouncements
-----------------------------

The Financial Accounting Standards Board (FASB) has issued Statements of
Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial
Instruments-an amendment of FASB Statements No. 133 and 140" and SFAS No. 156,
"Accounting for Servicing of Financial Assets-an amendment of FASB Statement No.
140" but they will not have a relationship to the operations of the Company.
Therefore a description and its impact for each on the Company's operations and
financial position have not been disclosed.

NOTE 2 - INVENTORY
------------------

At March 31, inventory consists of the following:


                                       2006             2005
                                   --------------   --------------
Raw materials                           $ 36,187         $ 52,436
Work-in-process                           32,073            2,361
Packaging and display                     31,762           53,250
Finished goods                             6,388           35,982
                                   --------------   --------------
  Total inventory                      $ 106,410        $ 144,029
                                   ==============   ==============



NOTE 3 - PROPERTY AND EQUIPMENT, NET
------------------------------------

At March 31, property and equipment, net consists of the following:
<TABLE>
<CAPTION>
                                                         2006               2005
                                                    ----------------  -----------------
<S>                                                     <C>                <C>
Production, engineering and other equipment             $ 4,505,143        $ 4,516,010
Leasehold improvements                                    2,629,400          2,629,400
Office equipment and furniture                              599,132            595,832
Computer equipment and related software                     319,469            315,795
Construction in process - equipment                          99,487             56,407
                                                    ----------------  -----------------
                                                          8,152,631          8,113,444
Accumulated depreciation                                 (1,789,386)        (1,171,539)
                                                    ----------------  -----------------
Property and equipment, net                             $ 6,363,245        $ 6,941,905
                                                    ================  =================
</TABLE>
                                      F-8
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - INTANGIBLE ASSETS
--------------------------

During the first three months of fiscal 2006, no significant identified
intangible assets were acquired and no identified intangible assets were
impaired. The following table present details of the Company's purchased
intangible assets:


                                 Gross
                               Carrying      Accumulated
                                Amount       Amortization       Net
----------------------------- ------------ ------------------------------
License Rights to
 Developed Technology           $ 420,000        $ (63,000)    $ 357,000
 Website                          200,000          (36,666)      163,334
                              ------------ ---------------- -------------

  Total intangibles             $ 620,000        $ (99,666)    $ 520,334
                              ============ ================ =============



Amortization of intangibles was $8, 583 and $8,583 for the three months ended
March 31, 2006 and 2005, respectively.

Based on the carrying amount of the intangibles as of March 31, 2006, and
assuming no impairment of the underlying assets, the estimated future
amortization is as follows:

         Years ended December 31,
         ----------------------------------------------------
         2006 (April 1 to December 31)                           $ 25,749
         2007                                                      34,333
         2008                                                      34,333
         2009                                                      34,333
         2010                                                      34,333
         Thereafter                                               357,253
                                                             -------------

         Total amortization                                     $ 520,334
                                                             =============



NOTE 5- STOCKHOLDERS' EQUITY
----------------------------

Private Placement Offering
--------------------------

On March 24 through 30, 2006, the Company entered into private placement
subscription agreements pursuant to which it sold unregistered shares of our
common stock, par value $0.00005 per share ("Common Stock"), and warrants
exercisable for Common Stock. The Company sold approximately 205 units in the
private placement, with each unit consisting of 40,323 shares of Common Stock.
In addition, investors who invested at least $500,000 in the private placement
received a five-year warrant with an exercise price of $1.00 per share to
purchase a number of shares of Common Stock equal to 10% of the number of shares
of Common Stock purchased (the "Warrants"). In the aggregate the Company sold
8,254,368 shares of Common Stock, and Warrants to purchase an additional 161,292
shares of Common Stock. Proceeds from the sale, net of commissions of $511,208,
totaled $4,600,870, of which $4,280,654 were received as of March 31, 2006. The
Company also entered into a registration rights agreement in connection with the
private placement pursuant to which it has agreed to file with the Securities
and Exchange Commission a registration statement covering the resale of the
Common Stock and Common Stock underlying the Warrants.


                                      F-9
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 STOCKHOLDERS' EQUITY (CONTINUED)
---------------------------------------

National Securities Corporation ("National Securities") served as the lead
placement agent in connection with the private placement. National Securities
will receive cash fees in the aggregate of $511,208 and warrants to purchase
824,537 shares of Common Stock on terms which are identical to the Warrants
included in the units except that the exercise price is $0.68 per share and they
contain an assignment provision. In addition, the placement agent's warrant has
registration rights that are the same as those afforded to investors in the
private placement.

The Company determined that all of the securities sold and issued in the private
placement were exempt from registration under the Securities Act of 1933, as
amended (the "Act") pursuant Section 4(2) of the Act and Rule 506 of Regulation
D Promulgated under the Act. The Company based this determination on the
non-public manner in which it offered the securities and on the representations
of the persons purchasing such securities, which included, in pertinent part,
that such persons were "accredited investors" within the meaning of Rule 501 of
Regulation D promulgated under the Act, and that such persons were acquiring
such securities for investment purposes for their own respective accounts and
not as nominees or agents, and not with a view to resale or distribution, and
that each such persons understood such securities may not be sold to otherwise
deposed of without registration under the Act or an applicable exemption
therefrom.

In January 2006, the Company conducted a self-underwritten offering of the
Company's common stock up to $1.24 million. The stock was sold for $31,000 per
unit. Each unit consists of 50,000 shares of common stock and 50,000 warrants.
The warrants are exercisable at $1.00 per share and expire in three (3) years
after purchase of the above-described unit. As of March 31, 2006, the Company
sold and issued 1,000,000 shares and received proceeds of $564,896 as of March
31, 2006 under the offering. Additional proceeds of $55,104 were received in
April 2006.

Exercising of stock warrants and options
----------------------------------------

During the first three months of 2006, there were stock warrants and options
exercised. The Company received total proceeds of $72,800.

NOTE 6 - NET LOSS PER SHARE
---------------------------

The following table sets forth the computation of basic and diluted net loss per
share:

                                                    Three Months ended
                                                         March 31
                                                    2006          2005
----------------------------------------------- ------------- --------------
Numerator:
----------------------------------------------- ------------- --------------
  Net loss                                      $ (2,705,699) $  (1,557,069)
----------------------------------------------- ------------- --------------

Denominator:
------------------------------------------------------------- --------------
  Weighted average number of shares outstanding   54,473,170     44,618,109
----------------------------------------------- ------------- --------------

----------------------------------------------- ------------- --------------
Net loss per share-basic and diluted            $      (0.05) $       (0.03)
----------------------------------------------- ------------- --------------

As the Company incurred net losses for the three months ended March 31, 2006,
the effect of dilutive securities totaling 2,453,404 equivalent shares has been
excluded from the calculation of diluted loss per share because their effect was
anti-dilutive.

As the Company incurred net losses for the three months ended March 31, 2005,
the effect of dilutive securities totaling 2,140,340equivalent shares has been
excluded from the calculation of diluted loss per share because the effect was
anti-dilutive.

                                      F-10
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - STOCK OPTION PLAN
--------------------------

The Company has a Stock Option Plan (the Plan) effective January 2, 1999 and
amended in 2004, which provides for the issuance of qualified options to all
employees and non-qualified options to consultants and other service providers.

A summary of the status of stock options issued by the Company as of March 31,
2006 and 2005 is presented in the following table.
<TABLE>
<CAPTION>
                                                          2006                             2005
                                              ---------------------------------------------------------------
                                                                Weghted                           Weghted
                                                  Number        Average            Number         Average
                                                    of          Exercise             of          Exercise
                                                  Shares         Price             Shares          Price
                                              ---------------------------------------------------------------
<S>                                                <C>            <C>              <C>              <C>
Outstanding at beginning of year                   12,892,939     $ 1.03           7,496,750        $ 1.15
Granted                                             1,600,000       1.05             305,000          0.77
Exercised                                            (141,955)      0.46              (5,000)         0.75
                                              ----------------               ----------------
Outstanding at end of period                       14,350,984     $ 1.04           7,796,750        $ 1.14
                                              ================               ================
Exercisable at end of period                       14,350,984     $ 1.04           7,766,750        $ 1.14
                                              ================               ================
</TABLE>
The fair value of each stock option granted is estimated on the date of grant
using the Black-Scholes option valuation model. This model uses the assumptions
listed in the table below. Expected volatilities are based on the historical
volatility of the Company's stock. The risk-free rate for periods within the
expected life of the option is based on the U.S. Treasury yield curve in effect
at the time of grant.

                                                          2006         2005
                                                      --------------------------
   Weighted average fair value per option granted           $ 0.68      $  0.68
   Risk-free interest rate                                    4.83%        2.54%
   Expected dividend yield                                    0.00%        0.00%
   Expected lives                                             3.00         3.00
   Expected volatility                                      127.83%      102.80%


All stock options granted during 2006 were fully vested.

NOTE 8 - DISSOLVING SUBSIDIARIES
--------------------------------

In 2006, the Board of Directors approved to wind down two inactive subsidiaries,
CGI Capital, Inc. and Veridisc Corporation, both of which had no asset or
liabilities as of March 31, 2006.

NOTE 9 - NAME CHANGE
--------------------

On February 6, 2006, the Board of Directors has approved a change of the company
name from Circle Group Holdings, Inc. to Z-Trim Holdings. This change is subject
to shareholder approval.


                                      F-11
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - DEPARTURE OF DIRECTOR; APPOINTMENT OF PRINCIPAL OFFICER
-----------------------------------------------------------------

On March 27, 2006, Edward L. Halpern, age 76, announced his retirement from the
Board of Directors.

Also, at its meeting on March 22, 2006, the Board of Directors promoted Steve
Cohen, formerly Vice-President of Corporate Development, to President, an office
previously held by Greg Halpern. Greg Halpern continues to hold the office of
Chief Executive Officer. Mr. Cohen, age 50, has been employed by Circle Group
since 2002 when he was hired as the director of investor relations. He was
promoted to Vice-President of Corporate Development in 2003.

NOTE 11 - PENDING LITIGATION
----------------------------

The Company filed a lawsuit in the U.S. District Court in 2005 to collect the
unpaid principal balance, default interest and attorney fees for a note
receivable for stock issued. The Company is in the discovery process and a trial
date has not been set.

In March 2005 the Company's general contractor that built the manufacturing
plant and installed the equipment filed a mechanics lien for unpaid billings.
The claim of $250,000 represents the construction cost overruns in the build-out
of the facility. The discovery process has commenced and no trial date has been
set. A liability of $142,000 has been included in accounts payable. Management
believes that the amount of ultimate liability with respect to such action will
not materially exceed such amount.

On November 23, 2005, the Company entered into a binding Letter Agreement (the
"Agreement") with George Foreman Enterprises, Inc. ("GFME") pursuant to which
both parties would form a new limited liability company ("Newco") for the
purpose of promoting the Company's zero calorie fat replacement food ingredient,
Z-Trim(R) (the "Joint Venture"). The parties did not reach any definitive
agreement. On May 9, 2006, the Company filed a lawsuit in the Circuit Court of
the 19th Judicial District, Lake County, Illinois against George Foreman
Enterprises, Inc. alleging breach of the parties' nondisclosure agreement and
misappropriation of trade secrets, seeking damages and injunctive relief. That
lawsuit has been removed to the Federal District Court for the Northern District
of Illinois.

NOTE 12 - RELATED PARTY TRANSACTIONS
------------------------------------

As of March 31, 2006, the Company had an employee receivable of $9,000 from the
Chief Executive Officer related to exercising his stock options in 2005. The
amount was applied against a bonus pay in April 2006.

As of March 31, 2006, the Company had an employee receivable of $45,900 from the
Chief Financial Officer related to exercising his stock options in 2005. The
amount was applied against a bonus pay in April 2006.

As of March 31, 2006, the Company had a stock subscription receivable of $20,000
from the President related to exercising his stock options in 2005.


                                      F-12
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13- GUARANTEES
-------------------

The Company from time to time enters into certain types of contracts that
contingently require the Company to indemnify parties against third party
claims. These contracts primarily relate to: (i) divestiture agreements, under
which the Company may provide customary indemnifications to purchasers of the
Company's businesses or assets; (ii) certain real estate leases, under which the
Company may be required to indemnify property owners for environmental and other
liabilities, and other claims arising from the Company's use of the applicable
premises; and (iii) certain agreements with the Company's officers, directors
and employees, under which the Company may be required to indemnify such persons
for liabilities arising out of their employment relationship. The terms of such
obligations vary. Generally, a maximum obligation is not explicitly stated.
Because the obligated amounts of these types of agreements often are not
explicitly stated, the overall maximum amount of the obligations cannot be
reasonably estimated. Historically, the Company has not been obligated to make
significant payments for these obligations, and no liabilities have been
recorded for these obligations on its consolidated balance sheet as of March 31,
2006.

In general, the Company offers a one-year warranty for most of the products it
sold. To date, the Company has not incurred any material costs associated with
these warranties.

NOTE 14 - SEGMENT INFORMATION
-----------------------------

The Company evaluates its reporting segments in accordance with SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. The Chief
Executive Officer has been identified as the Chief Operating Decision Maker as
defined by SFAS No. 131. The Chief Executive Officer allocates resources to each
segment based on their business prospects, competitive factors, net sales and
operating results.

During the third quarter of 2005, the Company changed the structure of its
internal organization to include three principal operating segments: (i) Food
Product Development, (ii) Security Training and Products and (iii) E-tailer. The
food product development segment owns the exclusive, worldwide license to
Z-Trim(TM). The Security training offers cost effective self-defense training
courses and products with a uniquely targeted curriculum. The e-tailer segment
is a distributor of pillows, blankets, and other bedding products. The Company
no longer reports segment information in its business consulting services. The
Company also has other subsidiaries that do not meet the quantitative thresholds
of a reportable segment.

The Company reviews the operating segments' income to evaluate performance and
to allocate resources. Operating companies' income for the reportable segments
excludes income taxes, minority interest and amortization of goodwill. Provision
for income taxes is centrally managed at the corporate level and, accordingly,
such items are not presented by segment. The segments' accounting policies are
the same as those described in the summary of significant accounting policies.


                                      F-13
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - SEGMENT INFORMATION (CONTINUED)
-----------------------------------------

Intersegment transactions are recorded at cost.

Summarized financial information of the Company's results by operating segment
is as follows:
<TABLE>
<CAPTION>
                                                                    Three Months ended
                                                                        March 31,
                                                               2006                  2005
-------------------------------------------------------------------------------------------------
<S>                                                               <C>                    <C>
Net Revenue:
  Food Product Development                                        $ 22,831               $ 4,482
  Security Training and Products                                     3,527                 1,595
  E-tailer                                                          88,889               113,093
                                                         ------------------    ------------------
Net Revenue by  Reportable Segment                               $ 115,247             $ 119,170
All Other Operating Revenue                                            196                   429
--------------------------------------------------------------------------- ---------------------
  Consolidated Net Revenue                                       $ 115,443             $ 119,599
--------------------------------------------------------------------------- ---------------------
Operating Income (Loss):
  Food Product Development                                      $ (534,843)           $ (393,023)
  Security Training and Products                                     3,456                 1,076
  E-tailer                                                          10,190               (41,565)
                                                         ------------------    ------------------
Operating Loss by  Reportable Segment                           $ (521,197)           $ (433,512)
All Other Operating Loss                                        (2,190,199)           (1,158,439)
--------------------------------------------------------------------------- ---------------------
  Consolidated Operating Loss                                 $ (2,711,396)         $ (1,591,951)
--------------------------------------------------------------------------- ---------------------
Net Income (Loss) Before Minority Interest:
  Food Product Development                                      $ (535,626)           $ (393,707)
  Security Training and Products                                     3,456                 1,076
  E-tailer                                                          10,190               (41,361)
                                                         ------------------    ------------------
Net Loss by  Reportable Segment                                 $ (521,980)           $ (433,992)
All Other Net Loss                                              (2,183,719)           (1,144,731)
--------------------------------------------------------------------------- ---------------------
Consolidated Net Loss Before Minority Interest                $ (2,705,699)         $ (1,578,723)
--------------------------------------------------------------------------- ---------------------



                                                                           March 31,
Total Assets:                                                       2006               2005
-------------------------------------------------------------------------------------------------
Food Product Development                                       $ 5,994,451           $ 6,540,703
Security Training and Products                                         468                13,877
E-tailer                                                            64,609                96,159
                                                         ------------------        --------------
                                                                 6,059,528             6,650,739
All other segments                                               5,113,571             1,600,806
---------------------------------------------------------------------------        --------------
Consolidated assets                                           $ 11,173,099           $ 8,251,545
                                                         ==================        ==============
</TABLE>
NOTE 15 - SUBSEQUENT EVENT
--------------------------

On May 2, 2006, the Company announced that it is aware that trading in its
common stock appears to be subject to widespread market manipulation. At that
time, the Company asked shareholders to demand their physical stock certificates
from their brokers as one tactic in a strategy to combat these problems. The
Company is in the process of developing a comprehensive plan to combat any and
all market abuses confronting our stock and to restore value to its shareholders
to the extent possible. A website will be made available to update shareholders
with further information.

                                      F-14
<PAGE>

                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        CIRCLE GROUP HOLDINGS, INC.
                                        (Registrant)

Date:  May 15, 2006
                                         By:  /s/ Gregory J. Halpern
                                              ----------------------------------
                                              Gregory J. Halpern, President and
                                              Chief Executive Officer

                                         By:  /s/ Dana L. Dabney
                                              ----------------------------------
                                              Dana L. Dabney, Chief Financial
                                              Officer



                                       11
<PAGE>
EXHIBIT INDEX

Exhibit No.                           Description
-----------    -----------------------------------------------------------------

 3.1(i)        Articles of Incorporation of Circle Group Holdings,
               Inc.[Incorporated by reference to Exhibit 2.1 to Circle Group's
               Registration Statement on Form 10-SB]

 3.1(ii)       Bylaws of Circle Group Holdings, Inc. [Incorporated by reference
               to Exhibit 2.2 to Circle Group's Registration Statement on Form
               10-SB]

4.1            Form of Subscription Agreement (filed as Exhibit
               4.1 to the Company's Form 8-K filed on March 30, 2006 and
               incorporated herein by reference).

4.2            Form of Warrant to Purchase Common Stock (filed as Exhibit 4.2 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

4.3            Form of Registration Rights Agreement (filed as Exhibit 4.3 to
               the Company's Form 8-K filed on March 30, 2006 and incorporated
               herein by reference).

10.1           Gregory J. Halpern Employment Agreement [Incorporated by
               reference to Exhibit 6.1 to Circle Group's Registration Statement
               on Form 10-SB]

10.2           Michael Theriault Employment Agreement [Incorporated by reference
               to Exhibit 6.3 to Circle Group's Registration Statement on Form
               10-SB]

10.3           Dana L. Dabney Employment Agreement [Incorporated by reference to
               Exhibit 6.4 to Circle Group's Registration Statement on Form
               10-SB]

10.4 (a)       Circle Group Holdings,Inc. 1999 Stock Option Plan [Incorporated
               by reference to Exhibit 6.6 to Circle Group's Registration
               Statement on Form 10-SB]

10.4 (b)       Circle Group Holdings, Inc. 2004 Equity Incentive Plan
               [Incorporated by reference to Circle Group's Proxy Statement for
               its Annual Meeting conducted on June 16, 2004 and approved by its
               Shareholders on that date]

10.5           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated May 20, 1999 [Incorporated by
               reference to Exhibit 6.7 to Circle Group's Registration Statement
               on Form 10-SB]

10.6           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated June 18, 1999 [Incorporated by
               reference to Exhibit 6.8 to Circle Group's Registration Statement
               on Form 10-SB]

10.7           Promissory Note, Dated November 30, 2002, delivered by Circle
               Group Holdings, Inc. in favor of Edward L. Halpern [Incorporated
               by reference to Exhibit 6.11 to Circle Group's Annual Report on
               Form 10-KSB for the year ended December 31, 2002]

10.8           Asset Purchase Agreement, dated August 27, 2002, by and between
               Circle Group Holdings, Inc. and UTEK Corporation [Incorporated by
               reference to Circle Group's Current Report on Form 8-K filed on
               September 11, 2002]

10.9           Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and Brookhaven Science Associates dated
               March 26 2003 [Incorporated by reference to Exhibit 10.14 to
               Circle Group's Form 10-QSB for the quarter ending September 30,
               2003]

10.10          Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and University of Illinois dated July 9,
               2003 [Incorporated by reference to Exhibit 10.15 to Circle
               Group's Form 10-QSB for the quarter ending September 30, 2003]

10.11          Assignment of License Agreement between Circle Group Holdings,
               Inc. and Brookhaven Science Associates dated July 22, 2003
               [Incorporated by reference to Exhibit 10.16 to Circle Group's
               Form 10-QSB for the quarter ending September 30, 2003]

31.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

* Filed herewith

                                       12
<PAGE>